It turns the wiki off as a safety feature, so that users don't accidentally create a page that already exists while the wiki is rebuilding. During a rebuild some pages will show as not existing when they actually do. It automatically turns back on after the rebuild finishes.
The domain IS technically updating for every page (the values are changing in the database, and visiting most pages shows that it has changed). But I think there is a problem when it comes to the wiki index. The index is stored in a cache since it is accessed frequently, and I think this cache isn't getting cleared when the domain changes. The cached version of the index still has the old domain.
I will look into this issue with the index cache, but you can work around it until I find a solution:
1. At the same time you change the domain, also disable the fancy URL format.
2. After it saves, change the URL format back to the one you wanted.
EDIT: Solved. The index URL now updates instantly.